It's been years since I had a bread machine (I gave it to my daughter), but as I recall, powdered milk (Carnation) is a necessity with no acceptable substitute for those recipes that call for it (usually ordinary white bread.) But understand that not all recipes use powdered milk. You might try one of those until you do get powdered milk. French bread usually doesn't use it.

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"Food is our common ground, a universal experience." - James Beard

I think the main reason for the dry milk is not to have fresh milk sitting for hours and hours in the machine if you use the time bake mode so you have fresh warm bread waiting for you after work. If you are adding ingredients and starting right away, there's no reason not to substitute fresh milk for the water/dry milk called for in the receipe.

However, with that said, dry milk lasts forever and is a handy pantry staple to have on hand if you are out or running low on fresh milk. I personally wouldn't mix and drink dry milk product but for cooking use it's not an issue. Shoot, I keep evaporated milk in the house for mashed potatoes and such in case we run out or forget to buy milk - neither of us drinks milk and only have cereal occasionally so we don't have milk in fridge often.